Alleged fraud shuts down promotion

Andale.com, an auction operations management firm,
cut short a promotion that paid sellers for each item they put up
for auction after several sellers began posting as many as 10,000 "phony
listings," the company said.

To pile up the $5 rewards offered by Andale, which posts auction listings,
manages inventory and tracks sales, about a dozen
sellers listed questionable items such as "a piece of fudge," said
Andale chief executive Munjal Shah.

The accusations underscore the hazards of doing business on the Net. Just this week, stalwart
auction firm eBay had at least 100 customers complain that scam artists
swindled them.

Shah declined to say whether Andale had filed a complaint with law
enforcement officials.

In addition, it has promised to honor all legitimate listings posted
prior to the promotion's cancellation Wednesday, Shah said, adding that the company is
conducting an audit and is postponing payment to all participants until its conclusion.

"We have to go through every single item," he said. "We will not pay for
any items we feel are illegitimate. It's too bad that a few people have
ruined it for the rest."

He added that Andale intends to run a similar promotion "as
soon as we can figure out how to prevent this from happening again."

The company said it began the promotion almost two weeks ago and had intended
to end it today.

On Tuesday, however, the company began noticing that some sellers were
requesting that Andale post an inordinate number of items, Shah said.

The company began investigating. At the same time, auction Web sites contacted
Andale to notify it that all the listings might not be on the level, he said.

According to Shah, several Web sites, which he declined to name, requested
that Andale discontinue the promotion over concerns that the questionable
listings may damage the integrity of their auctions.

The company notified participating auctioneers Wednesday that it was ending the promotion.